Be bold, Labour, and expose Osborne's skivers v strivers lie

Osborne's below-inflation benefit rise may not be as popular as he thinks. Labour can, and must, make the case against

'Labour MPs' surgeries brim with stories that need to be told, of families evicted unable to pay soaring rents, of children trapped in bed-and-breakfast single rooms, of "strivers" sinking through no fault of their own.' Photograph: Shelter

A masterstroke! That's what George Osborne thinks he has delivered, according to his people. He has devised an entirely pointless welfare uprating bill that enshrines a three-year 1% benefit rise, well below inflation, that he thinks will snare Ed Miliband into seeming to side with the workshy. "I hope it commands support from both sides of the House," Osborne said with a portentous smirk as he sprang his mantrap.

Osborne has made bad political miscalculations in the past and this could be another. This transparently political calculation may snap back at him. Real people, real children risk facing near-destitution so that he can indulge in political tactics. Cynicism of this depth may not escape the notice of voters; his trap could prove Labour's opportunity. Those close to Miliband say he is "robust" on this. He will denounce Osborne's mendacious dividing of "strivers" from "skivers" for the disreputable dishonesty it is. These cuts fall on many more people in work than out of work, not the workshy but those rising at 4am to clean offices on the minimum wage, but still earning too little to keep food on the table for their children.

David Cameron and Osborne are gloating at what they imagine is Labour's discomfort, certain that their great winning ticket is to hack harder and deeper at benefits. They think there is no limit to the slashing voters will tolerate. Until now Labour has wriggled miserably, nervous of polls that show little sympathy for the unemployed and a wildly exaggerated belief that fraud and shirking are rife. Cameron quotes one story about a large Somali family in a £100,000-a-year mansion, that featured 15 times in the Daily Mail. Though the family has long moved on and only five such cases ever existed, the image lingers for years.

Pilloried for lavishing taxpayers' money on the unworthy, Labour has mumbled and fumbled, uncertain how best to deny it. They were always conflicted, inclined in office to do good by stealth, signified by Gordon Brown renaming many benefits "tax credits", a meaningless disguise – though Labour rescued 800,000 children from poverty and greatly improved life for many families. But Brown cut support for the childless unemployed to show toughness.

Labour never made a rousing public case for greater equality. The minimum wage was immensely successful and popular, but a chance to turn Britain's dysfunctional pay structures into a wider political debate was missed. In opposition the same fear has gripped them, uncertain how to handle an understandable public fear of moral hazard, needing to separate the deserving from the undeserving. Navigating a firm public stance while urging generosity of spirit towards spiralling need is a tightrope that has left Labour semi-paralysed in combating this government's monstrous depredations on the poorest.

But now Osborne's challenge is jolting Labour into a new boldness. It looks clear they will vote against the benefit freeze bill. Ed Balls set out his tests on the Today programme: is this cut hitting working families (yes), does it lead to rising child poverty (yes)? Is it fair to take billions from lower income people on the day next April that Osborne gifts almost the same sum as a tax cut to top earners (no)? The scene is set for a grand confrontation, and not before time.

Labour's hand is forced by a dawning realisation that despite the rhetoric Osborne has little interest in dividing deserving from undeserving, the work-shy from the workers. The government treats anyone on benefit as part of the "dependency culture". This is a monumental shift, as all benefits are scheduled to fall back year on year permanently. To be sure the richest 1% take a hit too – but for them it's no more than snipping a gold button or two off their blazers. Down at the bottom cuts bite into the bone: food and heating costs that rise faster than inflation take up most of their income. Treating all on credits the same as the unemployed will be a political error. It risks uniting all 5.8m tax credit households and all mothers losing maternity pay and childcare credit with those who can't find work.

IFS figures show the upper middle to be the only gainers, mainly Tory-voting aspirers protected along with pensioners. None of this is accidental; it is a calculated and permanent shift in income away from the bottom. Some suggest the Tories just don't know: the mirror of society they carry in their minds is so badly distorted that they fail to comprehend that around 87% of earners are not paid the £41,000 that gets them into the 40% tax bracket. They barely know anyone on median income, let alone people who struggle to pay their food and heat bills. Tories see some in their surgeries – but local Labour parties have plenty of activists who themselves live below the median. Miliband's Doncaster party looks and feels nothing like Cameron's Witney party. But this social ignorance is intentional, part of a policy of convenient social blindness.

Cameron said again this week that he's "on the side of people who work hard and want to get on". But the public may not for much longer approve of smearing the unemployed: more people will have friends, relatives and children desperate to get on, stuck in part-time, temporary, low-paid jobs or none. This week's figures show unemployment will rise next year and the year after: will Cameron blame a sudden epidemic of idleness and scrounging?

The tone of sneering contempt will grate as people feel a colder blast next year. After April when large numbers are struck off disability living allowance, when bailiffs are at the door for unpaid council tax – while low to middle incomes fall further – this cocksure divide-and-rule will jar. Why no note of regret or sympathy, even if bogus?

To turn the public mood, Labour needs to find its voice and tell the stories that counteract Daily Mail scrounger anecdotes. For every cheat claiming disability while running a marathon, there are thousands of tales of the hard-working and the desperate-to-work queuing at food banks. Labour MPs' surgeries brim with stories that need to be told, of families evicted unable to pay soaring rents, of children trapped in bed-and-breakfast single rooms, of "strivers" sinking through no fault of their own.

Labour needs to say what they see. Forget the polls and the focus groups, let the facts speak for themselves. Ed Miliband's best instinct is that people are sick of Osborne's callow politicking. Voters will reward honesty in politicians who speak their minds. If not, why bother at all?